Michael Porter is considered as one of the most profound thinkers in the field of management. His work on the firm level competitiveness and sources of competitive advantage is considered as one of the highly regarded work in the field especially his work on Five Forces and Diamond model set the foundations for further study into the realm of competitiveness and competitive advantage. In Five Forces model, Porter attempted to outline five different forces which define the competitive strengths and position of organizations within their industry. These five forces comprised of rivalry between suppliers, threat of new entrants, bargaining power of buyers as well as suppliers and finally the threats of substitution products which may emerge out due to technological changes.
Porter’s Diamond Model is an attempt to define the competitive advantage of the nations and outlined different strategies to achieve that advantage. Porter’s Diamond Model included Factor Conditions i.e. factors of Production required for any given industry, Demand Conditions, Related Industries as well as corporate strategy, structure as well as rivalry.
However, later research pointed out some of the shortcomings in his work especially on his models of competitive advantage.
This paper will discuss some of the shortcomings which have been pointed out by later research on competitive advantage.
One of the most important critical discussions on his work has been directed at the lack of integrating culture as well as historical antecedents. The strategic models of competitive advantage, presented by Porter, often ignored how culture can affect the competitive advantage of the firms as well as whether historical antecedents have any repercussions for the firms to drive and sustain competitive advantages. (O’Shaughnessy, 1996). Further, it is also often argued that the findings of Porter lack empirical evidence and is based on the selective case studies i.e. most of the assertions of his strategies were based on selective organization working in a typical environment.
Further, it is often argued that the assumptions of Porter are no longer viable because of the emergence of new strategic forces such as digitalization, globalization as well as deregulations have radically changed the way business used to derive their competitive advantage. (Recklies, 2008). Digitalization or the emergence of e-Business models delivered through unconventional channels have completely revolutionized the businesses therefore relying on just select set of factors or so called forces no longer are considered as the viable and only sources of driving competitive advantage. It is also argued that the Porter’s theories reflected the economic situation of 1980s and more or less considered as specific to that particular situation therefore applying them across the different time periods may not be justified. As discussed above that Porter’s model lacked the historical antecedents therefore as the economies make transition from one period to another, the very basics of doing business and deriving competitive advantage change i.e. organizations with strong e-Business channels now provide better competitive advantage as compared to organizations which used to drive other competitive advantages in the past.
Michael Porter is considered as one of the foremost authority on strategic management. His theories set the foundations for further studies in the field of competitive advantage however later research proved that some of the assertions of Porter are not valid and subsequent changes in business dynamics suggest other and more relevant sources of competitive advantage.
1. O’Shaughnessy, N. J. (1996). Michael Porter’s revisited. Management Decision , 43 (6), 12-20.
2. Recklies, D. (2008). Beyond Porter – A Critique of the Critique of Porter. Retrieved November 22, 2008, from http://www.themanager.org: http://www.themanager.org/Strategy/BeyondPorter.htm